Natural person, company or trust?

Natural person, company or trust?

Private Property South Africa
Sarah-Jane Meyer

There are advantages and disadvantages to owning property as a natural person, in a company or in a trust. The entity you choose will depend on:

  • The purpose of the property.
  • Your personal circumstances at the time of the purchase.
  • Your foreseeable circumstances in the future.

If you are buying your first home and plan to live in it, you will most probably register the title deed in your own name, as a natural person.

If you are establishing a property portfolio or intend owning one or two units to supplement your income, you may want to register a company as the owner of the properties.

If you are planning for the security of future heirs or want to keep your spouse protected financially, it might be wise to consider establishing a trust in which to own property.

Natural person

For properties registered to a natural person the advantages include:

  • There are no annual auditor or accounting fees payable.
  • Upon the death of the owner, estate duty is payable if the property is registered in a natural person’s name. However, the tax paid should be lower than if the property is owned in a company or trust. Also, no estate duty is payable on estates of R3.5 million or less.
  • If you have one property registered in your name as a natural person, when you sell it the first R1.5 million profit will be exempt from capital gains tax (CGT) - if it is your primary residence.


  • Second and subsequent properties will accrue CGT.


If your plan is to own a few properties and grow your property portfolio, then it may be advisable to register a company and buy the properties in the name of the company.

  • The company should be registered with the Companies and Intellectual Properties Commission (CIPC).
  • The company must submit annual returns - which must be prepared by an accountant - within 30 days of the anniversary of the company’s inception.


  • You can write off expenses such as accounting fees and maintenance costs to the company.


  • When buying in the name of a company the costs are higher, and there are further costs later if the property is sold.
  • Accounting and registration fees are payable each year.
  • In addition to income tax on the income from the property, there will be dividend tax payable.


Trusts are often preferred for estate planning.


  • No transfer duty is payable when passing the property on to heirs or members of the trust.
  • No annual accounting or auditor reports are required.


  • Setting up a trust is expensive and requires legal assistance.
  • Using a trust as a vehicle for property ownership incurs the highest rate of income tax.


To justify the cost of running a company or a trust, you should calculate the amount that will be left over from rental income after deducting the costs of maintenance and repairs.

You need to carefully consider the way in which you want to buy a property before signing the offer to purchase. Decide upfront whether you are likely to continue investing in property as a business or whether you see it more as a hobby, with just one or two properties in addition to your primary residence.

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